Micron FY 3Q15 Earnings Call Notes

Revenue was lower because of weakness in the PC sector

“Thanks, Kipp. For our fiscal Q3 2015 Micron posted total revenue of $3.9 billion, within our revenue guidance of $3.8 billion to $4.05 billion. Revenue was sequentially lower as expected in fiscal Q3 due to near-term market headwinds, driven primarily by weakness in the PC sector.”

We expect DRAM ASPs to stabilize

“Turning to overall market conditions, we expect stabilizing DRAM ASPs across the broader market overtime, as we manage our product mix and distribute our capacity to a broad set of value added market segments. Consistent with prior expectations we are forecasting DRAM industry supply bit growth in the mid-20s in calendar 2015 and in the low to mid 20% in calendar 2016. We currently believe that DRAM demand in calendar 2015 in aggregate will be at or exceed supply.”

PC builds declined well below seasonally slow demand but other end markets were stable

“While PC builds declined well below seasonally slow demand in the first half of the year, we saw relative stability in other end markets and responded to these conditions by adjusting our production mix throughout the quarter.”

We think demand will be better in the back half of the year

” what I tried to indicate is that I think in aggregate for the year the demand is going to exceed the supply, which I think your takeaway from that would be that we believe that demand is going to be higher in the back half of the year as we said on the last call, and as we continue to believe.”

Even PCs should show small net growth

“Even PCs I think, our view is that by the time we get to the end of the year notwithstanding the decrease in unit sales, there will be a small net growth in bits into the PC segment.”

Nobody expected the PC segment to be this slow

“I think it’s fair to say that probably nobody expected the PC segment to be as slow as it’s been. And I think it’s also reasonable to expect that in an industry with a number of high growth segments balancing supply and demand is never going to be precise.”

Shift to other segments is an ASP headwind. Products have lower margin

“as companies like Micron and presumably our competitors over time readjust their supply to rebalance demand in different segments and pull supply out of that sector it creates an ASP headwind for us because we are moving to products that already have lower margin and it creates over the short-term more intense competition for those sockets in the high growth sectors.”

Mobile is more of a design to win business than PC

“Again we don’t want to — we don’t get into business of forecasting pricing too much. Generally what I would say characteristic of the mobile business is that it doesn’t exactly behave like PC business. That tends to be more of a design win type business, you design into a device or platform that has long lasting life cycles relative to interchangeability of PC modules. And in light of that it behaves a little bit more like a predictable pricing model where there is a sale price and a cost reduction target over through a longer period, maybe six months, maybe 12 months. And so the pricing behavior in mobile is somewhat different and we anticipate that to be similar going forward and it’s reflective of our current mobile performance.”